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NONCOMPETITION AGREEMENT
WHEREAS, the undersigned, Xxxxx X. Xxxxx (the "Executive") is a key
employee of the United Coatings, Inc. (the "Company"), a wholly-owned subsidiary
of Xxxxx & Xxxxxxx United, Inc., which engages in the business of manufacturing,
distributing and selling architectural paints and coatings in the United States,
and various other countries; and
WHEREAS, Executive is the beneficial owner of more than nineteen
percent (19%) of the issued and outstanding capital stock of Xxxxx & Xxxxxxx
United, Inc.; and
WHEREAS, Xxxxx & Xxxxxxx United, Inc., The Xxxxxxx-Xxxxxxxx Company
("Xxxxxxx-Xxxxxxxx") and SWACQ, Inc. have entered into a certain Agreement and
Plan of Merger dated November 4, 1995 (the "Merger Agreement"), for the purchase
by Xxxxxxx-Xxxxxxxx of all the issued and outstanding capital stock of Xxxxx &
Xxxxxxx United, Inc.; and
WHEREAS, Xxxxxxx-Xxxxxxxx was unwilling to enter into the Merger
Agreement unless as a condition entering into such agreement, immediately
following the execution and delivery of the Merger Agreement, Executive entered
into this Noncompetition Agreement; and
WHEREAS, in order for Xxxxxxx-Xxxxxxxx to receive all of the benefits
(competitive and otherwise) of the aforementioned acquisition, it is necessary
that Executive not compete with Xxxxxxx-Xxxxxxxx as set forth below.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Executive covenants with Xxxxxxx-Xxxxxxxx as follows:
1. Executive agrees that during the term of his employment with the
Company, Xxxxxxx-Xxxxxxxx or any affiliate of either, and for a
period of twenty-four months commencing upon the termination of
any such employment, he will not, directly or indirectly (a) own,
manage, operate, control or participate in any manner in the
ownership, management, operation or control of, or be connected as
an officer, employee, partner, director, consultant, agent or
otherwise with, or have any principal financial interest in, or
aid or assist any person or entity other than Xxxxxxx- Xxxxxxxx or
its Affiliates (as defined in Rule 405 promulgated under the
Securities Act of 1933), in the conduct of, any business, venture
or activity which manufactures, distributes or sells architectural
paints and coatings ("Competing Enterprise"), or (b) recruit or
otherwise seek to induce any employees of Xxxxxxx-Xxxxxxxx or its
Affiliates to terminate their employment or violate any agreement
with or duty to Xxxxxxx-Xxxxxxxx or any of its Affiliates, in the
United States, Canada, Mexico, Central America or South America.
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2. Nothing in paragraph 1 shall prevent Executive from: (a) owning
not more than two percent (2%) of the publicly traded equity
securities of any Competing Enterprise (so long as Executive has
no power to manage, operate, advise, consult with or control the
Competing Enterprise and no power, alone or in conjunction with
other affiliated parties, to select a director, general partner or
similar governing official of the Competing Enterprise); (b)
owning not more than ten percent (10%) of the equity interest of
any bona fide investment company registered as such under the
Investment Company Act of 1940 which holds an investment in a
Competing Enterprise; or (c) being a passive investor in a private
investment company serving as a multiple investment vehicle which
holds an investment in a Competing Enterprise (a "Fund") (i.e.,
Executive has no power, nor is he acting, to manage, operate,
advise, consult with, control or otherwise be in any way involved
with the affairs of a Competing Enterprise), provided that
Executive's capital in such Fund does not exceed ten percent (10%)
of all such interest therein, and such Fund is managed by a
registered investment advisor which is independent of Executive.
3. For purposes of this Agreement, the interests of Exeuctive in any
entity shall include, without limitation, the aggregate record and
beneficial ownership (as defined in Rule 13d-3 promulgated under
the Securities Exchange Act of 1934 (the "Exchange Act")) therein
of Executive, all members of his immediate family and his
Associates (as defined in Rule 405 promulgated under the
Securities Act of 1933).
4. Executive expressly agrees and understands that the remedy at law
for any breach by Executive of this Noncompetition Agreement will
be inadequate in that the damages flowing from such breach are not
readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that upon adequate proof of a
violation of this Noncompetition Agreement by Executive,
Xxxxxxx-Xxxxxxxx will be entitled to, among other remedies,
immediate injunctive relief and may obtain a temporary restraining
order restraining any threatened or further breach. Nothing in
this paragraph 4 will be deemed to limit Xxxxxxx-Xxxxxxxx'
remedies at law or in equity for any breach by Executive which may
be pursued or availed by Xxxxxxx-Xxxxxxxx.
5. In the event any court of competent jurisdiction determines that
the specified time period or geographical areas set forth in this
Noncompetition Agreement are unreasonable, arbitrary or against
public policy, then a lesser time period or geographical area that
is determined by the court to be reasonable, nonarbitrary and not
against public policy shall be substituted and enforced.
6. In the event that Executive violates any legally enforceable
provision of this Noncompetition Agreement as to which there is a
specified time period during with Executive is prohibited from
taking certain actions or engaging in certain
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activities then, in such event, the violation will toll the
running of the time period from the date of the violation until
the violation ceases.
7. This Noncompetition Agreement shall be governed and construed in
accordance with the laws of the State of Ohio.
Executive
/s/ XXXXX X. XXXXX
______________________________________
Xxxxx X. Xxxxx
Date: November 5, 1995
_________________________________
AGREED AND ACCEPTED BY:
The Xxxxxxx-Xxxxxxxx Company
By: /s/ XXXXXX X. XXX
__________________________________
Xxxxxx X. Xxx,
Vice President, Corporate Planning
and Development
Date: November 5, 1995
_________________________________
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